The dreaded downgrade.

Biden's health in the spotlight.

The big and beautiful Tax bill making its way through the sausage factory

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 Warm-Up
- The dreaded downgrade
- Biden's health in the spotlight
- Tax bill making its way through the sausage factory
- China continues to stimulate

Markets
- Yields - moving up after worrying signs for US debt levels
- Stocks posting big gains for May
- Bitcoin surges past $100k
- Our debt load is untenable - great chart to consider

The Big Beautiful Bill
- The bill eliminates taxes on tips and overtime.
- The bill achieves "no tax on social security" by increasing deductions for seniors on the program.
- The bill eliminates several green energy spending programs and ends the EV tax credit early.
- The bill makes auto loan interest tax deductible.
- The bill raises the debt ceiling by $4 trillion.
- The bill raises the State and Local Tax Deduction to $30,000 for people making $400K or less.
- The bill makes changes to the IRS free tax filing program, pending review by a task force.
- The bill includes tax on college endowments and private foundations.
- The bill includes reforms for how pharmacy benefit managers do business with the government.
- The bill creates a new savings account for children, and $1000 of funding will be provided.
- The bill raises the child tax credit to $2500 from $2000.
 USD DEBT
Moody's
- U.S. Treasury yields spiked on Monday after Moody's downgraded the U.S.' credit rating, citing fiscal concerns.
- That brings it down one notch from Aaa — the highest score — to Aa1
- The first time since the  initial rating back in 1919 that Moody's made a change
- Interesting timing - in the middle of a big spending package process -
--- maybe they are sending a message
-"This is a major symbolic move as Moody's were the last of the major rating agencies to have the US at the top rating," Deutsche Bank analysts said in a note.

Market reaction
- Futures fell in late trade after the close of the markets- when it was announced
- Bonds - long end moved.
--- 30 yr treasuries up over 5%
---- 30 yer mortgage rates over 7%
- Markets - yawned and turned on the open after a 1.5% love lower on the futures

Bessent reaction
-Treasury Secretary Scott Bessent said in an interview on NBC News' "Meet the Press" that Moody's Ratings were a "lagging indicator" after the group downgraded the U.S.' credit rating by a notch from the highest level.
-"I think that Moody's is a lagging indicator," Bessent said Sunday. "I think that's what everyone thinks of credit agencies."
- He asserted that the downgrade was related to the Biden administration's spending policies
- Is that right?

China - Stimulating
- China cut its key lending rates by 10 basis points on Tuesday, as Beijing ramps up efforts to boost its economy at a time when trade tensions threaten to derail growth.
- The People's Bank of China trimmed the 1-year loan prime rate to 3.0% from 3.1%, and the 5-year LPR to 3.5% from 3.6%.

US Steel still in play
- Nippon Steel plans to invest $14 billion in U.S. Steel's operations including up to $4 billion in a new steel mill if the Trump administration green lights its bid for the iconic U.S. company, according to a document and three people familiar with the matter.
- Under details of the plan included in the document, the company will plow $11 billion into U.S. Steel's infrastructure through 2028. That includes $1 billion in a green field site, which is expected to grow by $3 billion over the following years and has not been previously reported.
- There is  a deadline of May 21st for a national security review - then T...

DHUnplugged #753: Big and Beautiful